FDI and the skill premium in a North-South global economy
The effect of FDI from North to South countries on the skill premium of both groups of countries is examined. The lower wage of unskilled labor in the South induces the Northern firms to shift the unskilled labor intensive production processes in the South. FDI occurs in an unskilled labor intensive activity, but in a skill-intensive sector. It is shown that this leads to an increase in the skill premium of skilled labor in both North and South.
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Volume (Year): 17 (2008)
Issue (Month): 2 ()
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